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Efforts by the Australian government to make studying in Australia more attractive to foreign students appear to have boosted unemployment rates among the nation’s young people, according to a new report .

The report says tens of thousands of foreign students are successfully applying for different visas at the end of their courses so they can stay and work in Australia, in the hope of becoming permanent residents.

But the rapidly rising number of temporary migrants, including students, tourists and working holidaymakers, is causing increasing unemployment among young Australians.

A study by Dr Bob Birrell and Dr Ernest Healy of the centre for population and urban research at Monash University in Melbourne has found that the Australian-born workforce grew by just 58,000 in the 12 months to August whereas at least 100,000 migrants arrived in the course of the year and found employment.

These temporary migrants added to the one million already in the country.

“Inevitably, domestic job aspirants are being crowded out, particularly young people seeking to enter the workforce,” the researchers state.

“Australian-born youth unemployment has increased and, as of August, there were 666,830 unemployment benefit recipients, up from 627,000 in August 2011.”

The report, Immigration Overshoot, argues that Australia’s intake of migrants is too high and that several of the major visa subclasses being used by foreign students to remain in Australia need to be culled.

It notes that 255,000 foreigners held student visas in December last year, yet over the past 12 months nearly 140,000 former students were granted a different visa that allowed them to remain and work.

The main category of new visa granted is the graduate skilled visa, which was issued to 35,800 students who had completed their undergraduate courses.

This entitles the holder to stay in Australia and work for a further two years and was one of the key decisions made by the government aimed at attracting more foreign students to Australia after a sudden and disastrous decline over the past three years.

Another 33,500 students simply enrolled in a new course of study, such as switching from a university course to a vocational training programme.

Birrell and Healy say this looks very much like ‘churning’ – that is, using the flexible arrangements allowed by the Immigration Department for students to stay on in Australia by taking another course.

“A stunning element of this flexibility is that the department also allows students to stay on as tourists, nearly 27,000 of whom took up this opportunity in 2011-12. There is little doubt that most will be working, notwithstanding the unenforceable proscription forbidding tourists from working.

“This is partly because of their need to cover their living expenses but also because, for many, their main purpose for taking up a student visa in the first place was to gain access to Australia’s labour market. The ultimate goal for those with this aspiration is to obtain a permanent residence visa.”

The report says the problem for young Australians is that employment growth has slowed, particularly in the relatively low-skilled entry-level jobs in retail and other service sectors.

It warns that domestic workers face “ferocious competition from the temporaries for such work” because the latter are less likely to have access to family assistance or government welfare payments and are thus under extreme pressure to find employment.

The result is that employers can exploit the desperation for work and the legal vulnerabilities of temporary migrants by making them work long hours for below-award wages. The report says there is increasing evidence that young domestic workers have to accept ‘cash in hand’ work in lower skilled jobs.

The proportion of 15- to 19-year-olds unable to find full-time work is around 30% in some parts of Australia. Birrell and Healy argue that giving priority to the employment prospects of Australians is not just a moral imperative but that the present arrangements are also becoming very costly.

“The combination of the slowdown in employment growth and the intense competition for work from hundreds of thousands of migrants (permanent and temporary) is swelling the ranks of the unemployed.”

The report calls for a government crackdown to stop foreign students and other temporary migrants exploiting Australia’s visa system by working illegally and often under inferior conditions and pay.

It says overseas student and working holidaymakers should not be allowed to move on to tourist visas or be permitted to enter the Australian labour market.

“Our analysis indicates that for many temporaries, work is paramount. The escalation in the number of working holiday visa holders from job hungry nations, like Ireland, attests to this priority,” the report states.

“So too does the extent to which they are currently churning from visa subclass to visa subclass in order to remain in the Australian workforce. They are doing this in part because the regulations allow it.”

The report calls for an official inquiry to ensure that the government gives higher priority to the interests of young Australians affected by the influx of temporary overseas workers.

“It is the aggregate impact of the numbers and work concessions available to the diverse temporary visa subclasses which is the key problem. Part of the terms of reference for the proposed inquiry should be that this overall impact is assessed.”